2019. AUDIT THEORY AND PRACTICE. Audit. Executive Summa

AUDIT THEORY AND PRACTICE
2019

Audit
Executive Summary
The organizations in the present scenario are bound to have a high level of audit procedure
because it is in direct tune to the company’s functioning. The audit procedure is a mandate
that helps the company to function effectively. In this report, analysis of the items has been
done together with the audit procedure. Further, internal control and weakness has been
studied in the light of Always Precise Instruments Pty Limited.
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Audit
Contents
Introduction............................................................................................................... 3
Requirement 1............................................................................................................ 3
Requirement 2.......................................................................................................... 10
Requirement 3.......................................................................................................... 14
Conclusion.............................................................................................................. 15
References........................................................................................................... 16
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Audit
Introduction
Audit strategy, as well as the process of audit plays a dominating role in the identification of
risks of material nature in the organization. This can help the company in steering ahead in
the area of complications and challenges. This report stress upon the fact that audit is an
essential function of the organization and plays a dominating role is the process of risk
management (Wright & Charles, 2012). The report further sheds light upon the mechanism
of risks management together with the process of internal control. Internal control weakness
can hamper the movement of the company and it is though the audit function that the same
can mitigated.
Requirement 1
Ratio Analysis Audit
Risk
Audit
procedure
Current ratio: This ratio is very useful for calculation of short term liquidity
position of the organization. Liquidity is the state of an
individual on an organization to repay the debts as soon as
possible. After observing the business of Always Precise
Instruments Private Limited it can be stated that the higher
volume of sales and reduced trade receivables make it necessary
for the organization to have an increasing current ratio so that
they can increase the cash flows which will further help them to
increase the sales. In order to make it possible for the
organization to improve the sales and decrease the debts at the
same time, it is very necessary for the company to improvise the
cash flow position so as to move the current assets and liabilities
at the same pace. This will keep the organization free from any
kind of loans because of which it can earn more revenue. For the
year 2018, it was observed that the current ratio improves from
1.54 to 1.64 which is very appreciable in nature. This ratio is not
sufficient in accordance with the industry average but the small
Low Risk In this
scenario
analytical
procedure
should be used
by the auditor
to compare the
current assets
and current
liabilities. The
ratio
comparison
should be
same over the
period of time
unless the
company
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